United States: Antitrust Law: 2012 Highlights

In 2012, the Antitrust Division (Division) of the U.S.
Department of Justice won several significant convictions, both at
trial and through guilty pleas, while the merger enforcement
efforts of the Division and the Federal Trade Commission (FTC)
blocked or modified a handful of transactions. Elsewhere, the
European Commission's (EC's) cartel program continued
unabated, while the EC blocked one of the most closely watched
mergers of the year.

Criminal Cases and Investigations

TFT-LCD Price-Fixing
Trial: After an eight-week jury trial, the Division
obtained price-fixing convictions against AU Optronics, a Taiwanese
LCD manufacturer; its U.S. subsidiary; and two of its senior
executives. Judge Susan Illston of the U.S. District Court for the
Northern District of California subsequently levied a $500 million
fine against the company, the largest antitrust fine imposed since
Hoffmann La Roche pleaded guilty to fixing the price of numerous
vitamins in 1999.

Automobile Parts
Investigation: The Division continues to investigate and
prosecute corporate and individual defendants as part of its
ongoing investigation into alleged bid rigging and price fixing in
the automobile parts industry. Eight corporate defendants and 12
executives agreed to plead guilty to criminal antitrust charges in
2012. A ninth corporate defendant had previously pled guilty in
2011.

Municipal Bond
Investigation: In 2012, the Division's multiyear
investigation into alleged bid rigging in the municipal bonds
derivatives market resulted in three individuals pleading guilty to
Sherman Act violations and six more being convicted at trial for
wire fraud and conspiracy charges related to alleged bid rigging in
the market for municipal bond contracts and derivatives. A total of
19 current and former executives and one corporate defendant have
pleaded guilty or been convicted of charges related to the
investigation.

Civil Cases

Apple/E-Book Publisher
Litigation: The Division filed suit against five of the
largest book publishers for allegedly conspiring to reduce
competition in the market for e-books. The allegations arose out of
bilateral agreements between Apple and the publishers that adopted
an agency pricing model, under which Apple received
"most-favored nation" status for e-book prices. Four of
the publishers subsequently reached settlements with the DOJ in
which they agreed to (1) terminate their agreements with Apple and
(2) not enter into any agreements constraining retailers'
pricing discretion for at least two years. The DOJ is still
litigating the case against the other publisher.

FTC v. Watson
Pharmaceuticals, Inc.: The U.S. Court of Appeals for
the Eleventh Circuit ruled against the FTC in its latest challenge
to so-called "reverse payment" or "pay for
delay" settlements in the pharmaceutical industry. Under the
standard adopted by the Eleventh Circuit, reverse payment
settlements are presumptively legal under the antitrust laws as
long as the resulting period of exclusion is narrower in breadth
and/or shorter in duration than that granted by the presumptively
legitimate patents. The Eleventh Circuit's decision is unlikely
to be the last word on this matter because the U.S. Supreme Court
has granted certiorari in the case.1

Credit Card Interchange Fee
Settlement: Visa Inc., MasterCard Inc., and several large
banks reached a tentative $7.2 billion settlement with retailers to
settle a long-running antitrust case alleging that the credit card
companies and banks conspired to fix the price of "swipe
fees" that retailers paid for each transaction. If the
settlement receives final approval from the U.S. District Court for
the Eastern District of New York, it will be the largest antitrust
settlement in history.

Mergers and Acquisitions

3M and Avery Dennison:
3M Company, maker of the ubiquitous Post-it® Note, shelved its
plan to acquire label maker Avery Dennison's office and
consumer products division in light of threatened litigation by the
Antitrust Division. 3M had offered $550 million for the division.
According to the Division, the two companies directly compete in
the market for consumer and business labels, and the proposed
merger would have resulted in 3M's controlling 80% of the
market for labels and sticky notes.

Integrated Device Technology and
PLX Technology: The FTC filed an administrative complaint
seeking to enjoin the merger of two electronic component
manufacturers. According to the FTC, the $330 million merger would
have limited competition in the market for PCIe switches, which are
used in a variety of consumer electronics and computers. The two
companies subsequently abandoned the transaction.

Deutsche Boerse and NYSE
Euronext: The EC blocked Deutsche Boerse's $9.5
billion acquisition of NYSE Euronext. According to the EC, the
merged company would have a near monopoly in European derivatives
traded on financial exchanges. The parties claimed that the EC
relied upon an unrealistic and narrow definition of the market for
derivatives. Although the parties abandoned the transaction,
Deutsche Boerse has appealed to the European Court of Justice.

Footnotes

1. For more information about the Watson decision, see
our May 9, 2012, LawFlash, "Eleventh Circuit Rejects FTC
Challenge to Reverse Payment Settlement," available
here.

Copyright 2013. Morgan, Lewis & Bockius LLP. All Rights
Reserved.

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